Dialling the right number
Its main rivals, MTN and Vodacom — in which it held a stake until recently — are emerging as fully integrated telecoms providers spanning mobile, internet and fixed line.
For Telkom to remain competitive it must add mobile telephony to its fixed-line and internet businesses.
However, what is in doubt is whether Telkom will succeed in gaining a worthwhile share in the mobile market. Others have already tried, with limited success. Despite being launched to huge fanfare and succeeding elsewhere, Virgin Mobile has not made serious inroads, and Cell C has failed to unsettle the solid hold of Vodacom and MTN.
With the local market already largely saturated and customers apathetic about changing service providers, Telkom will have to work hard to win customers and will have to compete largely on price. The one advantage it has is that its existing clients could be coaxed into taking a package of services that includes mobile telephony. But here too it will come down to affordability.
The major obstacle it faces in offering a competitive product is its reliance on securing access to either MTN’s or Vodacom’s wireless network — as it does not have its own — which will come at a price. However, Telkom does have some leverage in that both its rivals require access to its fixed-line network, although it is not sure for how long as both are building their own transmission networks. Either way, if its cellular venture is to succeed, some tough negotiations lie ahead for Telkom in its bid to gain access to a cellular network on favourable terms. Telkom will also need to find ways to spread its retail presence as visibility will be key to winning customers, and finding a distributor keen to resell its products could pose another challenge.
This new venture may well be the beginning of a long, hard slog but the decision to expand into mobile telephony is far better than its ill-conceived Telkom Media venture and should benefit some customers.
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